Study 1: Conclusions and Implications

The first empirical study builds on Jansen et al.’s (2005) research and examines

organizational antecedents of ACAP. This study focuses on one core question: why are some firms better at managing potential and realized absorptive capacity than others? To answer this question, the study scrutinized the role of coordination, systems, and socialization in the ACAP process, with the moderating effect of market sensing and responsiveness on these relationships. Drawing on multilevel data from 200 managers, the findings indicate that coordination is positively

95

associated with potential absorptive capacity while system and socialization are positively associated with realized absorptive capacity. Also, market responsiveness strengthens the relationship between coordination and PACAP. Further, market responsiveness strengthens the relationship between socialization and systems and RACAP (the effect is significant at lower levels of market responsiveness), and the relationship between systems and RACAP (the effect is significant at both high and low levels of market responsiveness). The findings offer several contributions which are discussed below.

6.1.1 Contributions of the study

The study contributes to the extant literature in two ways. Firstly, this study builds on Jansen et al.’s (2005) seminal work and stresses that organizational antecedents

such as coordination, systems and socialization are important to manage potential and realized absorptive capacity, but are not sufficient for firms operating in dynamic markets. Organizations that manage better their potential and realized absorptive capacity actively sense and respond to environmental stimuli. As such, market sensing is a key activity to develop the acquisition and assimilation of knowledge. The practice of perusing, sensing, and understanding the environment is vital to yield effective acquisition and assimilation of knowledge underlying potential absorptive capacity. Also, market responsiveness is an essential capability to develop transformation and exploitation of knowledge. Through market responsiveness, organizations can avoid any disruptive changes that may occur in the process of transformation and exploitation of newly acquired knowledge, resulting in a better management of their RACAP. This study extends our understanding that firms using coordination, systems, and socialization to acquire, assimilate, transform and exploit knowledge in itself is not sufficient if firms do not also possess other learning processes, such as sensing and responsiveness capabilities. These learning processes are essential prerequisites to manage potential and realized absorptive capacity effectively.

Secondly, the study builds on the organizational learning literature. Prior research highlights that a greater responsiveness to the environment is determined primarily by the coordination capabilities of a firm (i.e., effective generation and

96

dissemination of information). Day (1994) argues that responsiveness to the external environment is expected to increase where information is generated and disseminated adequately, however, this study goes beyond this argument and shows that the increase of responsiveness is determined by the nature of mechanisms, processes, and capabilities within an organization. In other words, this study stresses that the increase/decrease of market responsiveness is based on the flexibility or rigidity of organizational mechanisms, processes and capabilities. For instance, socialization, which embodies more flexible processes, can be combined with a low level of market responsiveness capability to generate effective results, while systems which are based on rigid and formalized processes can be combined with a high level of market responsiveness capability to produce effective outcomes. Hence, when bank branches use system capabilities to transform and exploit knowledge, they need both low and high levels of market responsiveness. Given that systems are characterized by a high level of rigidity, repetitive actions and formalized procedures, it makes it difficult for firms to understand changes in the environment and respond quickly (Schminke et al. 2000). On the other hand, firms that capture realized absorptive capacity via socialization can effectively transform and exploit knowledge with a minimum/low level of market responsiveness capability. Socialization, which incorporates connectedness and socialization tactics, tends to provide more flexibility to react to the external environment (Saks and Ashforth 1996).’

This study advances organizational learning research by demonstrating that market oriented firms are not only driven by their level of coordination capability but also by the level of flexibility/rigidity of their internal mechanisms and processes. To sum up, this finding reveals that a firm’s absorptive capacity in itself is not sufficient to achieve higher organizational learning, unless it is also combined with other learning capabilities (i.e., market sensing and responsiveness capabilities). As noted previously, prior research has not examined learning capabilities that aim to read and react to changes in market conditions. Organizations that seek to learn from the external environment are more exposed to different dynamics, and are more likely to address challenges and recognize opportunities. The ability to learn faster than competitors requires them proactively to read and respond to different

97

market conditions when they assimilate and exploit external knowledge. This study stresses that the greater capacity to read and react to market changes assists organizations in obtaining information about current and latent market needs, which leads to higher learning orientation, and therefore anticipates what knowledge should be acquired, and how it can be exploited efficiently. Indeed, with long-term orientation, organizations can further develop disciplined learning from the external environment to sustain effective acquisition and application of knowledge, which contributes to the accumulation of resources and increased value from ACAP.

6.1.2 Practical Implications

To help ensure the effectiveness of the firm’s ability to absorb and exploit underlying knowledge, it is vital that firms encourage their employees to engage in activities requiring sensing and responding to the external environment. For instance, as Turkey is one of the major emerging economies and characterized by a dynamic environment (e.g. developing infrastructure and introducing economic and financial reforms), managers should sense, interact and respond continuously to changing market conditions. In particular, due to the shift in the competitive landscape of the banking sector, where foreign presence is on the rise and local banks are attempting to expand their local and international activities, organizations are under pressure to develop, renew and upgrade, and are thus required to understand and respond adequately to changing conditions.

In addition, from the research findings, for effective transformation and exploitation of knowledge, firms are required to use systems (e.g. routines) socialization tactics (e.g. connectedness) and also interact continuously and proactively with the external environment. This would activate a state of mind to avoid and respond to any disruptive changes that may affect the transformation and exploitation of knowledge. While systems and socialization provide systematic practices to execute actions, organizations need to respond to environmental changes to yield effective transformation and exploitation of knowledge. Managers may draw on this by interacting continuously with the environment in order to develop the firm’s ability to absorb and use knowledge.

98